Answer:
After the adjusting entry is made, Allowance for Doubtful Accounts balance is a credit balance of $22,290
Explanation:
Arundel Company uses aging to estimate uncollectibles.
Estimated uncollectibles = $250,000 x ( 1 - 99.5%) + $70,000 x (1 - 91%) + $30,000 x (1 - 73%) + $8,000 x (1 - 17%) = $1250 + $6,300 + $8,100 + $6,640 = $22,290
The current unadjusted Allowance for Uncollectible Accounts balance is a debit balance of $2,000.
Bad debt Expense = $22,290 + $2,000 = $24,290
The adjusting entry:
Debit Bad debt Expense $24,290
Credit Allowance for Doubtful Accounts $24,290
After the adjusting entry is made, Allowance for Doubtful Accounts balance is a credit balance of $22,290
